Yesterday's announcement of the $200
price reduction for the 8GB iPhone was a shock to the system. No one in the
industry was expecting it and customers that had already purchased the machine
at the $599 price point were fuming mad. To get an idea about how angry some
customers were, look no further than this thread at Mac Rumors
which is 1500+ posts long.

Steve Jobs got also got an earful with irate customers and
his inbox was overloaded with customer complaints about the $200 price cut
after only two months on the market.In
an open letter to all
iPhone customers, Steve Jobs expressed his "observations and conclusions."

"First, I am sure that we are making the correct
decision to lower the price of the 8GB iPhone from $599 to $399, and that now
is the right time to do it," said Jobs. "It benefits both Apple and
every iPhone user to get as many new customers as possible in the iPhone
'tent'. We strongly believe the $399 price will help us do just that this
holiday season."

On the flipside, Jobs was also sympathetic to the outrage
expressed by existing iPhone owners. “Therefore, we have decided to offer every
iPhone customer who purchased an iPhone from either Apple or AT&T, and who
is not receiving a rebate or any other consideration, a $100 store credit
towards the purchase of any product at an Apple Retail Store or the Apple
Online Store," Jobs continued.

Jobs noted that more details will be posted next week as
Apple and AT&T work out the details of the program.

$100 of in-store credit isn't exactly the same thing as $200
in cold cash, but it's surely better than nothing at all.

"If you can find a PS3 anywhere in North America that's been on shelves for more than five minutes, I'll give you 1,200 bucks for it." -- SCEA President Jack Tretton